22/02/2023 Daily Reports
EUR/USD
- EUR/USD extends its bearish continuation after Monday’s gains, offset by the US Dollar (USD), were sponsored by a risk-off impulse, despite upbeat data revealed in the Euro area. Nevertheless, US PMIs showed after Wall Street’s opening justified US Dollar strength, hence the EUR/USD fall. At the time of writing, the EUR/USD declined 0.39%, trading at 1.0648.
- S&P Global announced that the US economy experienced a boost in business activity in February, with all indices exceeding expectations. However, despite this positive development, the S&P Global Manufacturing PMI indicated that manufacturing activity remained in contractionary territory, coming at 47.8.
- Earlier in the European session, mixed PMI data for the bloc was unveiled by S&P Global. The S&P Global Services and Composite PMIs were better than expected in Germany and the Eurozone, though the Manufacturing Indices remained in contraction. Aside from this, the German ZEW economic sentiment improved to 28.1
- The EUR/USD pair is trading near the 1.0648, down for the day with bearish stance in daily chart. The pair still stabilized below 20 and 50 SMA, indicates bearish strength. Meanwhile, the 20 SMA started turning south and heading towards longer ones, suggests bears not exhausted yet. On upside, the immediate resistance is 1.0800, break above this level will extend the advance to 1.0930.
- Technical readings in the daily chart support the bearish stance. The RSI indicator stabilizes around 40. The Momentum indicator holds below the midline, indicating downward potentials. On downside, the immediate support is 1.0610 and below this level will open the gate to 1.0470.
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GBP/USD
The GBP/USD pair reverses an early European session dip to levels just below the 1.2000 psychological mark and rallies over 125 pips from the daily low. Spot prices turn positive for the third straight day and climb beyond the 1.2100 round figure, hitting a four-day high in the last hour.
The British Pound rises across the board in reaction to the better-than-expected UK PMI prints and prompts aggressive short-covering around the GBP/USD pair. In fact, S&P Global’s flash UK Manufacturing PMI unexpectedly improved to 49.2 in February from 47.0 in the previous month.
The gauge for the UK services sector returns to expansion territory and jumps to 53.3 during the reported month, squashing the recession narrative and boosting the Sterling. That said, expectations that the BoE current rate-hiking cycle is nearing the end, along with sustained US Dollar buying, act as a headwind for the GBP/USD pair. Firming expectations that the Fed will stick to its hawkish stance trigger a fresh leg up in the US Treasury bond yields and underpin the buck.
The GBP/USD offers bearish stance in daily chart. Cable stabilizes below 20 and 50 SMA, indicating bearish strength in short term. Meanwhile, the 20 SMA continued accelerating south and heading towards longer ones, suggests bears not exhausted yet. On upside, The immediate resistance is 1.2150 with a break above it exposing to 1.2270.
Technical readings in the daily chart support the neutral to bearish stances. RSI indicator stabilizes around 48, while the Momentum indicator stabilizes below the midline, suggesting downward potentials. On downside, the immediate support is 1.1910, unable to defend this level will resume the decline to 1.1840.
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XAU/USD
- Gold price slides in the North American session while the US Dollar rises sharply on risk aversion. At the same time, Fed officials hawkish rhetoric added to those speculations, with money market futures expecting rates as high as the 5.25%-5.50% range. The XAU/USD is exchanging hands at around 1836.00.
- US equities opened in the red as sentiment remains sour. S&P Global revealed that the US economy in February posted a recovery in business activity, with all the indices above estimates. However, as measured by the S&P Global Manufacturing PMI, manufacturing activity remained at 47.8 in the contractionary territory.
- The US Dollar Index, a gauge of the buck’s value vs. a basket of currencies, began to trim some of its earlier gains following the release of the PMI report, after hitting a daily high of 104.260, it’s down 0.12% at 103.878. Contrarily, the US 10-year benchmark note rate sits at 3.908%, gains six bps, capping the yellow metal rally.
- Gold price stabilized around 1836, slightly down for the day and bearish in the daily chart. The gold price stabilized below 20 and 50 SMA, suggesting bearish strength in short term. Meanwhile, the 20 SMA started turning south and heading towards longer ones, indicating bears not exhausted yet. On upside, the immediate resistance is 1860, break above this level will open the gate for more advance to 1891 area.
- From a technical perspective, the RSI indicator holds below the mid-line and stabilizes around 39, on a bearish strength. The Momentum indicator hold below the midline, suggests downward potentials. On downside, the immediate support is 1818, below this area may resume the decline to 1800.
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USD/JPY
- At the time of writing, USD/JPY is trading at 134.88 and has travelled between a low of 134.14 and a high of 135.22 so far. The US Dollar has been offering good two-way business on the day in volatile trading. However, the dominant theme remains an inflationary one and that is fuelling the bid in the middle of the US session following yet more positive US economic data.
- US Treasury yields hit new highs on Tuesday on the confirmation in the US data that both the services and manufacturing sectors have been robust in the month of February with S&P Global PMIs beating both prior and estimates. Investors are setting up for a longer-than-anticipated stiff monetary policy stance by the Federal Reserve following a slew of strong economic data.
- The next major catalyst will be the Federal Reserve’s release of the minutes of its last meeting on Wednesday, which will give traders a glimpse of how high officials are projecting interest rates will go following this impressive run of recent data for the first months of the year including stronger than expected jobs and inflation numbers.
- The USD/JPY pair stabilized around 134.88, up for the day and bullish in the daily chart. The stabilizes above 20 and 50 SMA, suggests bullish strength in short term. Meanwhile, 20 SMA continued accelerating north and heading towards longer ones, indicating bulls not exhausted. On upside, overcome 135.20 may encourage bulls to challenge 136.70, break above that level will open the gate to 138.20.
- Technical indicators suggest the bullish strength. RSI stabilizes around 63, while the Momentum indicator stabilizes in the positive territory, suggests upward potentials. On downside, the immediate support is 133.50, break below this level will open the gate to 132.50 area.
DJI
- DJI continued under the sell pressure, retreated from intraday high 33870 area to low 33150 area. It then bounced modestly and ended Tuesday around 33210, down for the day and indicates bearish sign in the hourly chart. Right now market is standing below 20 and 50 SMA, suggests bearish strength. Meanwhile, 20 SMA continued accelerating south and developing far below longer one, suggests bears not exhausted yet. On upside, overcome 33550 may encourage bulls to challenge 33900, break above that level will open the gate to 34220.
- Technical indicators suggest the bearish movement, developing below the mid-line. RSI stabilizes around 16, while the Momentum indicator stabilizes in the negative territory, suggests downward potentials. On downside, the immediately support is 33140, break below this level will open the gate for more decline to 32950 area.
BRENT
- The Brent under the sell pressure, failed to broke above 84.30 resistance zone and reverse the direction to downside and ended the day around 82.80. The price currently stabilizes below 20 and 50 SMA, suggests bearish strength in the hourly chart. Meanwhile, the 20 SMA started turning south and heading towards longer ones, indicates bears not exhausted yet. On upside, overcome 84.30 may encourage bulls to challenge 85.70, break above that level will open the gate to 87.00.
- Technical indicators also suggest bearish movement, hovering below the midline. RSI drops to 43, while the Momentum indicator stabilizes in negative territory, suggests downward potentials. On downside, the immediately support is 81.80, break below this level will open the gate for more decline to 79.10 area.
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